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2 CONTENT

1. The Group's Future Value System

2. Results Overview

3. R&D and Innovation

4. Marketing and Sales

5. M&A and International Collaborations

6. Manufacturing Facilities

7. Financial Review

8. Future Prospects

3 Chapter One The Group's Future Value System

4 The Group's overall development strategy

Mission： Innovation serves human health

Vision: Leading with innovation and R&D, by means of investment, incubation, M&A, spin-offs and other strategic planning and core-value creation methods, to become a leading international pharmaceutical group in .

Take investment, joint Take the Group's wholly- Incubate successful Cooperation with external venture, and equity owned holding subsidiary companies parties to realize value-add participation in other companies as core-value operating independently system companies as extension system as value amplification • Benxi Hengkang systems • Beijing Sihuan system • Xiangtong • Sichang • Jilin Suhuan • Xuanzhu Group • Zesheng Environmental • PharmaDax • Jilin Jinsheng • Jilin Huisheng Protection Pharmaceutical • Honghe Pharmaceutical • Jilin Aokang • Tonghua Tianshi • ChemPion • Beijing Aohe • Jilin Kangtong • Chongqing West District • Zhongrui Pharmaceutical • Innovative R&D • Beijing Ruiye Hospital • STRIDES, India • Sihuan Medical Beauty • Huaiyin Hospital • HETERO, India

Focus on rapidly developing therapeutic areas: cardiocerebrovascular, oncology, diabetes, metabolic diseases, anti-infection Core Advantages： • Innovation-driven, imitation and creation co-exist, and a number of carefully incubated high-quality product development platforms have achieved good performance progress • Possess a rich and high-quality pipeline of R&D products covering multiple major therapeutic areas • Comprehensive, professional and efficient academic marketing platform • High efficiency, low cost, modern manufacturing facilities covering multiple therapeutic areas • Abundant cash balances and stable financial conditions provide sufficient support for the steady development and rapid expansion of the Group 5 The Group's future value system

Xuanzhu Jilin Group Huisheng

Beijing Jilin Ruiye Value Kangtong Amplification System Jilin Sihuan Aokang Aesthetic Beijing Sihuan Benxi Jilin Honghe Jilin Hengkang Sichang Pharma Sihuan Core value PharmaD system Changchun ax Xiangtong Beijing Jilin Aohe Jinsheng Value Innovative Value-add Extension External Zesheng ChemPion R&D Environmental System Cooperation Protection

Huaiyin Hetero Zhong Hospital Tonghua Rui Chongqing Tianshi Strides West District Hospital 6 Chapter Two Results Overview

7 Results overview

Results Review

From continuing operations • Revenue decreased by 36.4% year-on-year and 13.6% Revenue R&D expenditure period-to-period, to approximately RMB1.05 billion 1.05 billion 392.7 million • R&D expenditure and related activities increased by 43.9% year-on-year to approximately RMB392.7 million, representing 37.2% of total revenue • Profit attributable to company owners of the Company turned into profit, approximately RMB170.5 million Profit attributable to owners Net cash • The gross profit margin is 74.5% of the Company 4.34 billion • 170.5 million The Group has maintained a strong financial position and has recorded a net cash of over approximately RMB4.34 billion

Marketing and Sales

Nicotinamide Huineng Mainuokang Shucheng Diprophylline for injection injection +187.2% +137.3% +98.2% +116.2% +162.6%

Multiple products maintain rapid growth

1H19 1H20 1H19 1H20 1H19 1H20 1H19 1H20 1H19 1H20 8 Results highlight

Major R&D project progress Progress of major cooperation projects

Anaprazole sodium, a self-developed innovative patented drug Xuanzhu Biopharmaceutical introduced CMG-SDIC as a for digestive system, commenced phase III clinical trials shareholder of the company with RMB800 million in capital

Data from Janagliflozin’s phase III clinical trials has been locked and is currently been analysed Associated company Beijing Ruiye introduced a total of RMB200 million from two investors Insulin Degludec commenced phase III clinical trials

Equity investment in Zhongrui Pharmaceutical to increase the Rivastigmine hydrogen tartrate capsule and levetiracetam Group’s API production capacity tablet have been granted production approval

Midazolam oromucosal solution has been granted registration Equity investment in Champion to strengthen the Group's approval R&D capabilities in API enzymatic process, continuous flow process technology, etc.

Paediatric compound amino acid injection (18AA-II) obtained Signed a cooperation agreement with Hetero to strengthen drug registration approval R&D in the field of cardiovascular, central nervous system and anti-infection capsule was selected in the second batch of the National Centralized Drug Procurement Established an associated company with Strides to supply and distribute four drugs in China Several registration approval have been granted for non-PVC solid-liquid double chamber products Other injection has been granted production approval Project special cash dividend payment: RMB10.6 cents per share 1H2020 special cash dividend payment: RMB3.0 cents per share The study of post-launch clinical verification research on cinepazide maleate injection was published in foreign journal

9 Chapter Three R&D and Innovation

10 R&D progress and outlook

• A clear R&D pipeline has been established and resources have been concentrated on therapeutic areas with significant clinical needs, including oncology, metabolic diseases, NASH and diabetes.

Innovative drugs • Janagliflozin, an independently developed innovative patented drug for the treatment of diabetes, is currently in its phase III clinical trial in China. are deployed in major areas, • Anaprozole sodium, a new generation of PPI, has commenced Phase III clinical trials in China. vigorously promoted, • Benapenem, a carbapenem , is currently in its phase II clinical trials in China. making significant progress • Birociclib, a CDK4/6 inhibitor, is currently in its phase I clinical trials in China.

• ALK inhibitor XZP-3621, and the third-generation EGFR inhibitor XZP-5809 commenced phase I clinical trials in China.

• Several generic drugs received drug registration approvals issued by NMPA and will be launched in the next few years.

Multiple layout in • Multiple products in the generic drug R&D pipeline are expected to be the first three products that have passed or deemed to pass the generic drugs, consistency evaluation. ideal progress • Multiple drugs acquired approval, including midazolam oromucosal solution (approved), azithromycin capsule (approved for consistency evaluation), rivastigmine hydrogen tartrate capsule (approved), ibuprofen injection (approved) etc. A variety of products are expected to has been made be approved in 2020, they are levetiracetam concentrated solution for injection, ticagrelor tablet, clopidogrel hydrogen sulphate tablet, gabapentin capsule, caspofungin acetate for injection, rivaroxaban tablet, moxifloxacin hydrochloride sodium chloride injection

• Focusing on the treatment of diabetes and complications which covering biological and chemical products., also established a complete Biosimilars product pipeline

in the field of diabetes • The company's current research products including insulin and its analogs, GLP-1 analogs, and oral solid preparations. There are 13 products under development in insulin and GLP-1 product line.

• PharmaDax Pharmaceutical, an associate company of the Group, is one of the few in China which has a drug production quality Accelerate acquisition control systems approved by the U.S. Food and Drug Administration. It is planning to promote international development of the Group through the drugs registration submission in both China and overseas. of international high-quality • and innovative products Beijing Ruiye, an associate company of the Sihuan, has developed "non-PVC solid-liquid double-chamber bag infusion" products (including ceftazidime, cefuroxime, and cefodizime), and have obtained multiple approvals for a variety of specifications. Sihuan Pharmaceutical has the exclusive right to sell the product. 11 R&D platform – innovative R&D drives long-term growth

Xuanzhu Biopharmaceutical- Experienced，international Innovative Drug R&D Center R&D management team

• An international enterprise integrating R&D, production and sales of Dr. Shih Cheng-kon - Chairman of Shandong Xuanzhu innovative drugs. Biopharmaceutical

• Benchmarking: One of the Top tier well-established companies that develop • Doctor of Rockefeller University and postdoctoral fellow of Sloan innovative small molecule drugs in China；its advantages including high Kettering Cancer Center. threshold for innovative technology, low industrial production cost, convenient use by patients, easier penetration of small molecules through the • Worked for Boehringer Ingelheim Pharmaceutical Company, an blood-brain barrier, and better curative effect on tumor metastasis or internationally renowned pharmaceutical company for 20 years and corresponding brain diseases. led multiple new drug R&D teams successfully .

• Research fields: mainly focus on oncology, metabolic diseases and other diseases has large markets potential and unmet clinical needs. Xuanzhu owns Dr. Li Jiakui - Director and General Manager of Shandong Xuanzhu its completely independent intellectual property rights and does not rely on Biopharmaceutical CRO, it is one of the few innovative drug companies in China that has formed a new drug R&D system platform. • Doctor of Pharmacy from the Arnold and Mary Schwartz School of

• Products developed: Birociclib, a CDK4/6 inhibitor for advanced breast cancer, Pharmacy, Long Island University, New York, USA. Jiao is expected to be the first to be marketed in China; Janagliflozin, an SGLT2 Tong University School of Medicine, Bachelor of Clinical Medicine, inhibitor for the treatment of diabetes, has cardio-renal protection while 5 years practicing physician in Ruijin Hospital. lowering blood sugar. It is also expected to be the first to be launched in • 22 years of experience in innovative drug R&D. Worked at Roche China. for 15 years. • Future direction: independent R&D paired with technique introduced from Europe and the US, focusing both large and small molecules, leveraging a new drug R&D system platform completely. More than 5 innovative drug products Dr. Bin Liu - Vice President of Medicinal Chemistry in Shandong are expected to be launched to the market, thus becoming a leading company Xuanzhu Biopharmaceutical in China's innovative drugs. • Ph.D. in organic chemistry from West Virginia University and • CMG-SDIC was introduced as shareholder with RMB800 million to subscribe postdoctoratal fellow in Princeton University. 18.6% equity of Xuanzhu Pharmaceutical. The two parties will conduct comprehensive strategic cooperation in the introduction and R&D of • Worked in the internationally renowned pharmaceutical company innovative drugs in the future. Eli Lilly for 19 years, mainly engage in R&D of new drugs. 12 Innovative drug pipeline – multiple major therapeutic areas

Established a clear R&D pipeline, resources are concentrated on therapeutic areas with significant clinical needs, including oncology, metabolic diseases, diabetes and NASH, etc.

Projects at clinical Clinical Clinical Phase NDA Therapeutic area Target Clinical Phase III stage Phase I II submission Monotherapy Janagliflozin Diabetes SGLT-2 2021 Combined therapy with metformin

Monotherapy 2021 Birociclib Oncology CDK4/6 Combined therapy with fulvestrant 2023 Combined therapy with fulvestrant 2024 XZP-5809 Oncology EGFR XZP-3621 Oncology ALK 2024 Anaprazole sodium Gastrointestinal PPIs 2021 Benapenem Anti-infective Carbapenem - Male XZP-5849 PDE-5i - reproduction XZP-5610 NASH FXR -

Projects at preclinical Therapeutic Target LI/LO Preclinical IND stage area validation XZP-5955 Oncology 2021 XZP-6019 NASH 2021 XZP-P107 Oncology

13 R&D platform – innovative R&D drives long-term growth

Jilin Huisheng Biological

• A pharmaceutical company with a comprehensive product pipeline that focuses on the treatment of

diabetes and complications, covering biological and chemical products. Related R&D is progressing as

planned thanks to a strong R&D team with rich experience in key functional areas such as process

development, quality research, preclinical research, clinical development and operation, registration, and

chemical drug CRO/CMO/MAH management.

• The innovative biopharmaceutical R&D platform of the biological sector has already initiated the

development of a new generation of long-acting insulin, new long-acting GLP-1 analogs, oral GLP-1

analogs and other innovative drug pipelines. The pipeline of biosimilar drugs has covered the second, third

and fourth generations, quick-acting, short-acting, medium-acting, long-acting and dual-time insulins, also

mainstream GLP-1 analogues; 8 clinical approvals have been obtained, of which insulin aspart III is at the

end of clinical phase, insulin degludec has entered phase III clinical phase.

• In the chemical drugs sector, independent R&D of innovative drugs and introduction from Europe and the

United States are processing at the same time. While the independent R&D of a self-developed class 1 drug,

Janagliflozin, has completed phase III clinical research and will be submitted for production approval, it has

actively carried out overseas innovation project introduction for new hypoglycemic drugs . The

development of generics has inherited the traditional R&D advantages of the company. In the short term, it

is a foregone conclusion to form deep coverage with biguanides, DPP-4 inhibitors, SGLT-2 inhibitors, AGIs,

peripheral neuropathy and other varieties. 14 • Huisheng will build a first-class enterprise in the target field with its first-class drug R&D capabilities. Biosimilars drug pipeline

A pharmaceutical company with a comprehensive pipeline which focusing on the treatment of diabetes and its complications, covering biological and chemical products. Current research products include insulin and its analogs, GLP-1 analogs, and oral solid preparations. There are 13 products in the insulin and GLP-1 product line under development.

Approval for Phase I clinical Phase II Phase III Variety Drug name Preclinical clinical trials trials clinical trials clinical trials

Insulin degludec injection

Insulin aspart injection

Insulin aspart 30 injection

Insulin aspart 50 injection

Recombinant human insulin injection Insulin and Protamine recombinant human insulin injection analogs Protamine recombinant human insulin mixed Injection (Premixed 30R) Refined protein recombinant human insulin mixed Injection (Premixed 50R) DS012

DS006

DS003 GLP-1 receptor DS005 agonist DS004 15 R&D platform - Prevent R&D from laying the foundation for enterprise development

Beijing Aohe Generic Drug R&D Center

• The group's generic drug R&D center is dedicated to developing of first-to-market generic drugs, and has advantageous technology platforms such as injections, freeze-dried preparations, emulsions, insoluble drug preparations, sustained and controlled release preparations, implants, and soft capsules. It focus on the therapeutic areas of neuropsychiatric, thrombotic diseases, digestive system, bacterial infections and other diseases. • The future focus will be on oncology, metabolism (diabetes), hormones, aesthetic medicine, etc. Currently, market-leading generic drugs in multiple therapeutic fields are in review and approval stage in China. In the future, the group will focus on the drugs registration submission and strategies in both China and United States, and strives to become a first-class international drug research and development institution.

16 Generic drug product pipeline

Pharmaceutical Estimated time to Registration Indications Drug name BE Registered Research market Classification Midazolam oromucosal solution Approved（2019） 3 levetiracetam tablet Approved（2020） 4 Rivastigmine hydrogen tartrate capsule Approved（2020） 4 Ibuprofen injection Approved（2020） 3 Gabapentin capsule 2020 4 Neuropsychiatric levetiracetam injection concentrated solution 2021 4 Flurbiprofen injection 2021 3 Lakosamine tablet 2021 4 AH001 2022 - AH002 2022 4 AH003（Consistency evaluation） 2022 -

Octreotide Acetate Injection* Approved（2018） 6 Pantoprazole sodium for injection - （Consistency evaluation） 2021

Digestive Rosartidine acetate hydrochloride SR capsule 2022 3 system AH004 - diseases 2022 AH005 2022 4 AH006 2022 4 AH007 2022 -

*The first company that submitted consistency evaluation in China

17 Generic drug product pipeline

Pharmaceutic Register Estimated time to Registration Indications Name of the Drug BE al Research ed market Classification AH008 2022 4 AH009 2022 4 Anti-diabetic AH010 2022 4 AH011 2022 4 Sacubitril valsartan sodium tablet 2021 4 AH012 2022 3 Cardiovascular AH013 2022 3 system AH014 2022 3 Olprinone hydrochloride injection 2022 3 Clopidogrel sulfate tablet 2020 4

Rivaroxaban tablets 2020 4

Thrombotic Sulfonda sodium injection 2021 4 disease Ticagrelor tablet 2021 4

AH015 2022 4 Agathaban injection 2022 4

18 Generic drug product pipeline

Pharmaceutical Estimated time to Registration Indications Name of the Drug BE Registered Research market Classification

Azithromycin capsules Approved（2019） - (Consistency evaluation) Caspofungin acetate for injection 2020 6 Sophobovir tablet 2021 4 Propofol fumarate tenofovir tablets 2021 4 AH016 2022 3 Anti- infection AH017 2022 3 AH018 2022 4 AH019 2022 4 AH020 2022 4 Moxifloxacin hydrochloride sodium 2020 4 chloride injection Linezolid glucose injection 2023 4 Hemostasis Tranexamic acid injection 2023 4 Pediatric compound amino acid Approved（2020） 6 Nutritional injection （18AA-Ⅱ） therapy Compound amino acid injection Approved（2019） 6 （20AA） Anesthetic Ropivacaine hydrochloride injection 2022 4 Electrolyte Multiple Electrolytes Injection（Ⅱ） Approved（2019） 6 supplement Potassium aspartate injection 2022 3

Osteoporosis Zoledronic acid injection 2022 4 Tebutaline sulfate injection 2022 3 Respiratory Bromohexine hydrochloride system 2022 319 injection Chapter Four Marketing and Sales

20 Comprehensive, professional and efficient academic marketing platform

Combination of breadth and depth of regional layout Coverage City level Coverage city rate Beijing/Shanghai/Guangzhou First-tier 100% /Shenzhen Chengdu/Chongqing/Hangzh ou/Wuhan/Xi'an/ New Tianjin/Suzhou/Nanjing/Zhen 100% First-tier gzhou/Changsha/Dongguan/ Shenyang/Qingdao/Hefei/ Foshan Second-tier 30 100% Number of hospitals Third-tier or <100 288 100% below 100 - 300 300 - 500 The number of hospitals covered in 2020 is 14,460, 500 – 800 of which >800 Tertiary hospital 2000

Secondary hospital 5491 BU1 Below secondary hospital 6969

Sales & Marketing Team BU2 Shensi

Since 2016, the group began to build professional academic marketing team in accordance with therapeutic areas and BU management system, preparing for future new products. Jinsheng Honghe 21 Excellent marketing model

SihuanPharm

Central Marketing Department/ Medical/Equipment Commercial Sales Department Marketing Training Department Department of Medical Sciences Regional Marketing Department Vigilance Department

Professional marketing team Distributor

Hospitals and doctors

patient

The professional marketing team of Sihuan has more than 1,000 people, and work with more than 20,000 sales managers from over 3,000 distributors, thus the marketing network operates efficiently. Past performance proves that this unique marketing model is very successful, which features high output and cost efficiency ➢ Establish a dedicated and large-scale direct sales team to promote innovative products, rapidly develop and penetrate the market

▪ More than 1,000 people in professional marketing team： Product managers • All of them have medical background and over 8 years of industry experience；Responsible for organizing and participating in national, provincial and municipal academic conferences, holding hospital department seminars, formulating market strategies, interviewing industry experts, and providing product knowledge training for distributors. Sales managers • With over 12 years of industry experience；Responsible for drug bidding, screening/selecting distributors, supervising the sales progress of distributors, paying attention to their performance, and providing necessary support and services to distributors Medical manager, medical/equipment vigilance manager, marketing training manager • With master's degree or above in medicine, more than 6 years of industry experience；Responsible for coordinating post-marketing product medical evaluation, visiting high-end experts and industry leaders. Build the group PV system and implement it, also providing distributors with relevant training in medicine and medical equipment vigilance. Over 3,000 distributors with a sales team of more than 20,000 people, of which nearly 40% only distribute Sihuan products • Covers a wide range of provinces, the proportion reaches 100%；Have an in-depth understanding of local market, and established a good relationship with local hospitals, responsible for hospital market development and products sales to hospitals, and responsible for the22 daily maintenance of the hospital relationship. Rapid increase of new products

➢ 2017 edition of "Clinical Path Interpretation" Surgery Section Launch Year 2015 ➢ 2017 and 2020 edition of "Clinical Pathway Therapeutic Drug Interpretation" Internal Medicine Section (County Hospital Edition) Therapeutic ➢ 2020 edition of "Clinical Pathway Therapeutic Drug Interpretation" Digestive system area Surgery Section (County Hospital Edition) ➢ 2018 national edition "Clinical Pathway Interpretation" Digestive Hospital Disease Section 943 (237 newly added) coverage ➢ Only two domestic manufacturers

➢ 2018 national edition of "Clinical Pathway Interpretation" Launch Year 2015 Rheumatic Immunity Section ➢ 2020 edition of "Clinical Pathway Therapeutic Drug Interpretation" Therapeutic Internal Medicine Section (County Hospital Edition) Liver disease area ➢ 2020 edition of "Clinical Pathway Therapeutic Drug Interpretation" Surgery Section (County Hospital Edition) Hospital ➢ Exclusive varieties 2150 (1440 newly added) coverage ➢ Included in the 2019 National Reimbursement Drug List

Launch Year 2018 ➢ 2018 edition of "Interpretation of Clinical Pathway Therapeutic Drugs" Cardiovascular Disease Section Therapeutic Peripheral vasodilator ➢ 2018 edition of "Clinical Pathway Therapeutic Drug Interpretation" area Neurology Section ➢ Hospital 2019 National Reimbursement Drug List Category B 3105 (1032 newly added) coverage

Launch Year 2015 ➢ 2020 edition of "Clinical Pathway Therapeutic Drug Interpretation" Internal Medicine Section (County Hospital Edition) Therapeutic ➢ 2020 edition of "Clinical Pathway Therapeutic Drug Interpretation" CCV area Surgery Section (County Hospital Edition) ➢ Both of ginkgo biloba extract and ligustrazine are included in Hospital National Reimbursement Drug List 910 (190 newly added) coverage ➢ Exclusive product

Time to 2017 market ➢ Exclusive freeze-drying process which is safe and effective ➢ 2019 National Reimbursement Drug List Domain CCV

Hospital 23 2753 (1048 newly added) coverage New opportunities in the adjustment of NRDL

Accroding to 2020 NRDL adjusting work plan Drugs not included in the catalogue and with the following conditions are possible to be included in the scope of the proposed new drugs in the 2020 drug catalogue: • During the period from 1st January 2015 to 17th August 2020, drugs (including new active ingredients and new dosage forms) approved by the NMPA in accordance with the new drug registration application procedures • Before 31st December 2019, included in more than 5 the latest PRD, except for those whose main active ingredients are included in the "first batch of Key Monitoring Drug List”

The following new products are expected to seek new opportunities in the new round NRDL adjustments

Products listed in 5 PRDL Newly approved products

Midazolam oromucosal solution

Ibuprofen injection Mainuokang Jie’ao Yeduojia

24 Non-CCV products sales rapidly growing

Revenue of non-CCV drugs increased by 114.6% year-on-year to RMB444.9 million *Exclusive products

➢ Revenue of non-CCV drugs accounted for 42.2% of the total revenue ➢ The sales growth of non-CCV drugs was mainly attributable to an increase in hospital coverage of growth- stage products during the Period

Revenue of major non-CCV products

Therapeutic 1H2020 1H2019 Product Name YoY Change Area (RMB’000) (RMB’000) Monoammonium Liver disease glycyrrhizinate and cysteine and 89,335 37,640 +137.3% sodium chloride injection（Huineng）* Digestive Roxatidine acetate 69,798 62,720 +11.3% system hydrochloride for injection（Jie’ao） Peripheral Nicotinic acid injection（Shucheng） 56,862 26,297 +116.2% vasodilator Smooth muscle Diprophylline for injection 22,177 8,444 + 162.6% relaxants Central Nervous Oxcarbazepine（Ren’ao） 18,791 9,187 +104.5% System

Anti-infective Azithromycin capsules（Wei’aoqi） 7,857 - -

Clindamycin Anti-infective 4,381 7,887 -44.5% hydrochloride injection（Xinnuoao）

25 Non-CCV products sales rapidly growing

Revenue of major non-CCV products Diprophylline for injection 300,000 22,177 +162.6% 7,857 Azithromycin capsules (Wei’aoqi)

4,381 -44.5%

18,791 +104.5% Xinnuoao (Clindamycin 200,000 hydrochloride injection) 8,444 56,862 +116.2% Ren’ao (Oxcarbazepine)

7,887

89,335 +137.3% 26,297 Shucheng (Nicotinic acid injection) 100,000 9,187… 37,640

Huineng (Monoammonium 62,720… 69,798 +11.3% glycyrrhizinate and cysteine and sodium chloride injection) 0 Jie’ao (Roxatidine acetate 1H2019 1H2020 hydrochloride for injection)

26 Resist the impact of key monitoring products with strong evidence-based medical evidence

Re-establishing the market position of Accelerating the generation of evidence-based verification for cinepazide maleate growth-stage products to support their market access and • The Group has completed a large-scale clinical verification academic promotions research for cinepazide maleate injection (Brand name: Kelinao) for the treatment of acute ischemic stroke, with 1,301 patients • Actively promoting the medical work of growth-stage products such as roxatidine, Huineng recruited. The results showed that the product can effectively and floium ginkgo extract and tertram ethypyrazine, and cooperating with top hospitals and improve prognosis and reduce the disability rate of stroke research institutes in the PRC, such as Tiantan Hospital, the Institute of Medicinal Plant patients. A research conclusion meeting was held in April 2019 Development Affiliated with the Chinese Academy of Medical Sciences and the Institute of under the presidency of Professor Cui Liying from Peking Union Materia Medica of Peking Union Medical College, to carry out preclinical experimental Medical College Hospital, the leader of the research team, and research and clinical research to clarify product pharmacodynamics, mechanism of action, the review materials were submitted to the Center of Drug clinical effectiveness and safety. Relevant research results have been published in "European Evaluation (CDE) in October 2019. The review is currently in the Journal of Pharmacology", "Chinese Emergency Medicine" and other journals. final stage. The principal findings of the studies have been published in BMC Neurology in July 2020. The secondary results • Growth-stage products, floium ginkgo extract and tertam ethypyrazine, has also completed have also been accepted by the Chinese Journal of Neurology. studies for acute toxicity, hemolysis, allergy, irritation, and abnormal toxicity, which proved the safety of the product. At the same time, the basic research on "floium ginkgo extract and tertam ethypyrazine’s effect on cerebral ischemia-reperfusion injury" was carried out with the Institute of Medicinal Plant Development Affiliated with the Chinese Academy of Medical Sciences. The main part of the research has been completed and the preliminary results were published in the journal “Pharmacology and Clinics of Chinese Materia Adapting to policy changes and Medica". strengthening academic promotions by promoting products inclusion interpretation Adjusting marketing strategy and refining management of promotion of clinical pathways, rational drug use, and focus of products at different stages guideline consensus, etc. • Reinforcing existing mature products: such as cerebroside-kinin, troxerutin and cerebroproptein ▪ While improving its evidence-based research system, the hydrolysate, the Group boosts the growth in the scope of rational use of drugs through Group is proactively adapting to the changing government intensifying the development of markets of hospitals that are classified as Class II or below and policies by spearheading products inclusion in interpretation exploring new models such as out-of-pocket drug market. of clinical pathways and rational drug use guidelines, which • Increasing professional and academic promotion and hospital coverage of growth-stage are in alignment with current government policies. Multiple products:, such as Huineng, Jie’ao, floium ginkgo extract and tertram ethypyrazine, nicotinamide products of the Group have been recommended for various and nicotinic acid, future growth prospects are positive given the low market penetration rate at indications in the “Interpretation of Clinical Pathways” and present. In particular, through negotiation, Huineng was included in the new National the "Interpretation of Clinical Pathway and Therapeutic Reimbursement Drug List in 2019, which has provided ample room for its market development. Drugs”, etc. The Group will continue to step up academic The Group increased its efforts in promotion of such product in order to accelerate hospital promotions, and actively participate in the promotion of coverage, expand market share and alleviate pressure on the growth of mature products. rational drug use, expert consensus and guidelines. • Newly launched products: for new products such as troxerutin and piracetam, the Group leverages on its strong marketing and promotion system, refines investment solicitation and holds professional and academic meetings to gain recognition from experts and tap into markets27 in an immediate manner. Continue introducing new products Slow down the decline in sales of CCV products

The revenue of CCV drugs decreased by 58.0% year-on-year to RMB609.6 million

➢ CCV drugs accounted for 57.8% of total revenue ➢ The decline in the sales of CCV drugs was mainly due to the key monitoring drug list announced in July 2019

Revenue of major CCV products 1H2020 1H2019 1H2020 1H2019 YoY YoY Product name Product Name Change Change (RMB’000) (RMB’000) (RMB’000) (RMB’000) Nicotinamide Cerebroside-kinin injection injection 116,153 40,441 +187.2%(Oudimei/Aofutai/Weitong/Jielixin） 154,296 517,684 -70.2% * Floium ginkgo Troxerutin and cerebroprotein extract hydrolysate injection 91,113 311,842 -70.8% and tertram (Yuanzhijiu/Xingwei/Xinyintong） ethypyrazine sodium 58,104 29,319 +98.2% * chloride injection Compound trivitamin 54,360 39,564 +37.4% （Mainuokang）* B(II) for injection（Yeduojia）* 180,000 Salvia miltiorrhiza and 1H2019 1H2020 ligustrazine hydrochloride 51,787 161,505 -67.9% Injection (Wei’ Ao）

+98.2% +187.2% GM1 injection 35,681 92,776 -61.5% （Aogan/Xiangtong） 120,000 116,153 Cinepazide maleate injection 10,627 152,732 -93.0% （Kelinao/Anjieli） 58,104 Alprostadil 60,000 lipid emulsion injection 9,485 63,879 -85.2% 40,441 29,319 （Yikangning/Yimaining） Cerebroprotein hydrolysate 7,339 11,958 -38.6% （Qu’ao） 0 28 Mainuokang (Floium ginkgo extract Nicotinamide injection and tertram ethypyrazine sodium chloride injection) Chapter Five M&A and International Collaborations

29 Multi-dimensional international BD platform

The Group established a global business development center in the United States which is responsible for expanding and managing Partner Year Collaboration Collaboration Overview business projects in domestic market and overseas, in order to accelerate the introduction and deployment of international projects. The BD direction includes oncology/immunocology, diabetes and • Increase the production capacity other therapeutic areas with huge clinical needs. of the Group's APIs to ensure the 2020 Equity investment stable supply of APIs for related Leslie Boyd, Ph.D. preparations –Chief BD Officer • Responsible for the acquisition of • Strengthen the group's research the Group's product operating and development capabilities in rights and investment and merger 2020 Equity investment high-tech barrier APIs, continuous strategies • Nearly 20 years of experience in flow processes, enzymatic drug development and business processes, etc. development • The content of cooperation • Vice President of GSK Global Business Development (2007) Cooperation includes the research and • Vice President of Teva Research 中瑞药业 2020 Framework development of drugs in the field and Evaluation Department, Head Agreement of CCV, central nervous system of Special Project Due Diligence and anti-infection fields Department (2016) • Established a joint venture with Set up a joint Indian generic drug company, 2019 venture Strides to supply and distribute Joyce Pei, Ph.D. four drugs in China –Head of Global Oncology BD • More than 35 years of work • Subscribing for 19.99% shares and Phased corporate bonds of PharmaDax by experience in well-known 2017 multinational pharmaceutical investment RMB200 million in the first phase companies • FDA certified production line • More than 20 years of work • Signed a long-term partnership to experience in the fields of Signed a support the preclinical and clinical oncology/immunology, business 2015 cooperation development and product global development of the agreement licensing rights Group’s innovative drug projects • Senior Director of Boehringer Ingelheim's Global Oncology • Jointly develop botulinum toxin Signed a Strategic Alliance (2013-2016) and hyaluronic acid products 2014 cooperation • Vice President of International • Two products have completed agreement Business Development Investment clinical trials in China of Simcere Pharmaceutical (2017) 30 Chapter Six Manufacturing Facilities

31 High efficiency and low cost and, modern manufacturing facilities covering multiple therapeutic areas

• Jilin Huisheng focuses on the treatment of diabetes and complications, and strives to become the top 1 brand of diabetes in China. Jilin Huisheng

• With a complete product pipeline, the products under development cover insulin and its analogs, GLP- 1 analogs, and solid preparations such as DPP-4 and SGLT-2. Among them, the Class I new drug - Jiapagliflozin tablet will be submitted for production soon.

• The company has established a biopharmaceutical pilot plant certified by GMP, and built a biopharmaceutical industrialization workshop (Phase I project) in accordance with GMP, EU and FDA standards. The main production equipment is purchased from international or domestic first-line manufacturers and integrated in Siemens DCS system. It is fully automated production which can meet the needs of clinical, marketing and future export of products under research. The Phase II project of the biopharmaceutical industrialization workshop and the solid preparation workshop have now completed project evaluation. Jilin Kangtong

• The only Chinese patent medicine production base and oral solution production Jilin Aokang base in the strategic layout of the Group. Among them, the core products Caoxian hepatitis B capsule, Niuhuang Qingnao Kaiqiao Pills, Midazolam oralmucosal solution and other products are applying for NRDL and Essential Drugs. At the same • In April 2020, the Group had integrated resources such as the time, it is accelerating the optimization of production layout and transformation, in original Jilin Huikang Pharmaceutical and Jilin Shengtong order to improve the quality system, expand production capacity and production Chemical to build the most competitive international API and efficiency, and build a base to undertake the commissioned production of oral intermediate production platform. Advantages of the entire preparations within the Group. industry chain within five major sections: APIs, advanced • Currenly owns 164 varieties, 71 NRDL category A, 42 NRDL B; 73 OTC category A, 30 intermediates, primary intermediates, food additives, OTC category B; 61 Essential drugs. CMO/CDMO, 1,000-ton capacity.

• Obtained the only high-content CBD scientific planting qualification for industrial • International market/business platform: Intermediates have been hemp in Jilin Province. It has established the "Northern Industrial Hemp Research widely sold in Europe, , Korea, Southeast Asia and other Center" with the Hemp Research Institute of the Chinese Academy of Agricultural countries except for the United States (in the process of Sciences to carry out comprehensive strategic cooperation. registration), with 6-7 varieties occuping the leading position in the Japanese and Korean markets. The international registration • Targeting to start the research and development of the "Internet + medicine" of APIs is in progress, and it is expected that more than 10 industrial e-commerce platform, exploring and innovating new pharmaceutical sales varieties of export business can be realized within 2-3 years. models, and striving to build an industrial full-circulation pharmaceutical e- commerce platform serving all enterprises of the Group. • Featured technology: Master the advanced enzymatic process, with the guarantee of quality, cost and safety.

32 High efficiency and low cost and, modern manufacturing facilities covering multiple therapeutic areas

Jilin Sihuan

• The Group's strategically deployed chemical drug injection production base and oral solid preparation production base, it is committed to becoming a nationally well-known renowned anti-tumor product professional company with strong system competitiveness and a national leading large-scale oral preparation and injection R&D and production base.

• The company has the first-class domestic production lines for ampoules (terminal sterilization and non-terminal sterilization) and 1 production line for ampoules (terminal sterilization), with a production capacity of 210 million injections per year. The company has a pilot production workshop for ordinary oral solid preparations and a closed production workshop for anti-tumor oral solid preparations and is building a large-scale oral solid preparation production workshop with high standards and high productivity.

Beijing Sihuan Jilin Jinsheng • Focuses on the development and production of CCV drugs, the Group’s strategic R&D pilot center and the production base with the most abundant production lines.

• The Group’s production base with the most comprehensive dosage forms among others: sterile powder injections, freeze-dried powder injections, small- volume injections (terminal sterilization and non-terminal sterilization), tablets, capsules, and granules.

• Strong innovation and production capacity: 39 varieties and 61 specifications. Its CCV drug cinepazide maleate injection won the Chinese Patent Gold Award; • The only freeze-drying production base according to the Group's strategic layout, the first- Digestive system drug rosatidine hydrochloride acetate obtained the second phase production capacity is 80 million pieces/year. prize of Beijing Patent Invention; 0.25g metformin hydrochloride tablets were • In April 2014, the first freeze-drying workshop passed the GMP certification of the the first domestic company to pass the consistency evaluation, and azithromycin capsules 0.25g was selected in the second batch of national drug collections. National Bureau; in March 2016, the second freeze-drying workshop passed the GMP certification as the first sterile preparation company certified and inspected by the Jilin Provincial Bureau. • Jinsheng currently has 33 varieties of freeze-dried powder injections, of which 28 are new drug varieties and 8 are exclusive varieties, such as the exclusive patented product for the treatment of peripheral nerve injury, compound three-dimensional B (Ⅱ) for injection, etc.

33 Chapter Seven Financial Review

34 Financial highlight

Continuing operations 1H2020 1H2019 Key Income Statement Items (RMB’000) (RMB’000) YoY Change Revenue 1,054,537 1,657,640 (36.4%) Gross profit 786,057 1,365,549 (42.4%) Research and development 392,693 272,886 43.9% expenditure* Operating profit/(loss) 315,135 (1,695,409) N/A Profit/(loss) attributable to owners of 170,491 (2,001,479) N/A the Company

Key Financial Indicators Gross profit margin 74.5% 82.4% N/A Net profit/(loss) margin 16.0% (117.2%) N/A Earnings/(loss) per share – Basic (RMB 1.80 (21.13) N/A cents) Receivable turnover ratio (days) 49 53 (4) days Interim cash dividend per share (RMB 0.1 0.4 - cents) Special cash dividend per share (RMB 3.0 - - cents) 35 *includes R&D expenditure and related activities Revenue

Revenue decreased by 36.4% year-on-year to RMB1,054.5 million

➢ Revenue of CCV drugs revenue decreased by 58.0% year-on-year to RMB609.6 million ➢ Revenue of non CCV drugs increased by 114.6% year-on-year to RMB 444.9 million ➢ The decreased sales of CCV drugs was mainly due to the drop in patient flow in hospital during the COVID-19 pandemic and products exclusion from PRDL and NRDL starting from the second half of last year. ➢ Regarding non CCV drugs, because of strong sales platform, hospital coverage of the drugs has sharply increased.

（RMB Million）

-36.4% 1,657.6 42.2% 57.8%

1,054.5

1H2019 1H2020 CCV drugs non CCV drugs

36 Gross profit and gross profit margin

Gross profit decreased by 42.4% year-on-year to RMB786.1 million

➢ Overall gross profit margin decreased from 82.4% the last period to 74.5% for the Period.

➢ The lower gross profit margin was resulted by decreased sales of drugs which had better profit margin but were captured in the KMDL during the Period.

（RMB Million）

2,000.0 90.0% 82.4%

74.5% 80.0%

1,000.0 70.0%

-42.4% 60.0% 1,365.5 786.1

0.0 50.0% 1H2019 1H2020

Gross Profit Gross Profit Margin 37 R&D expenditure

R&D expenditure increased by 43.9% to RMB392.7 million, representing 37.2% of total revenue*

➢ R&D expenditure represents 37.2% of total revenue.

➢ The increase in R&D expenditure is because the Group has continued its efforts in research and development activities.

*includes R&D expenditure and related activities （ RMB Million ）

500.0 50.0%

37.2% 40.0%

30.0% 250.0 16.5% 20.0%

272.9 +42.4% 392.7 10.0%

0.0 0.0% 1H2019 1H2020 R&D expenditure Percentage of revenue 38 Strong financial position

Net cash Net cash-to-equity Debt-to-equity 4.3 billion Ratio Ratio 50.3% 7.1%

（ RMB Million ） Current assets 8,000

441.9 ➢ The Group has maintained strong financial position, 6,000 and has recorded net cash of approximately

4,000 RMB4,336.0 million 5,117.1 4,947.8 ➢ Net cash-to-equity ratio (net cash / equity attributable 2,000 148.3 420.9 to owners of the Company) recorded as 50.3% 630.1 694.2 0 409.6 439.7 ➢ Debt-to-equity ratio (borrowings / equity attributable 1H2019 1H2020 to owners of the Company) recorded as 7.1% Assets of disposal groups classified as held for sale Cash and cash equivalents Financial assets at fair value through profit or loss Trade and other receivables Inventories 39 Chapter Eight Future Prospects

40 Short-, medium- and long-term growth engine

2020

• Growth stage products Mainuokang 2021-2022 Roxatidine Huineng • Products in NRDL Category A and • Market-leading generic drugs to be Category B launched soon 2022 and onwards Nicotinamide for Injection Midazolam oromucosal solution Nicotinic acid injection Rivastigmine hydrogen tartrate capsule Dopamine for injection • Blockbuster innovative drugs Diprophylline for Injection Levetiracetam injection concentrated solution Janagliflozin Ibuprofen injection Birociclib •Bid-winning varieties in GPO Ticagrelor tablet Anaprozole sodium Azithromycin capsule Clopidogrel sulfate tablet Gabapentin capsule • New products from M&A and Caspofungin acetate for injection international cooperation Rivaroxaban tablets

• PharmaDax's upcoming specialty drugs Quetiapine fumarate SR tablet Glyburide tablet

• Beijing Ruiye products with advantageous formulation Solid-liquid double chamber bag series products

▪ Continuously enriching project resources and optimizing product portfolio, view domestic and overseas mergers and acquisitions as the Group's continuous strategy, to provides short-, medium- and long-term growth engines 41 Strong products line covering multiple therapeutic areas

Existing mature New products recently Upcoming products products launched

Huineng Troxerutin injection Kelinao Midazolam oromucosal solution

Rivastigmine hydrogen tartrate capsule Oudimei Jie’ao Wei’aoqi Levetiracetam injection concentrated solution

Compound electrolytes 澳苷 injection（Ⅱ） Aogan Pufulin Shucheng

Wei’ Ao Mainuokang Piracetam injection

Janagliflozin Yuanzhijiu Non-PVC solid-liquid Anaprozole double-chamber bag sodium cefodizime

Non-PVC solid-liquid Birociclib double-chamber bag 烟酰胺（普扶林）ceftazidime

CCV Digestive system Liver disease Anti-infective

Metabolism Oncology CNS Other fields 42 Future prospects

Multiple high-quality innovative R&D platforms and Increase the resource product pipelines with years of allocation to drug research investment and thoughtful and development projects incubation Improving evidence- Actively promoting based research system， Increase resources to Rich and comprehensive growth stage promoting the inclusion establish a sustainable product lines and tiers covering products through of key products in product line comprehensive therapeutic refined market therapeutic guidelines areas management, and Adjust product structure rapidly increase hospital Strengthen expert through mergers and A professional sales team and coverage consensus and acquisitions and market network with rich interpretation of clinical international cooperation experience, high performance enhancing development pathways and comprehensive hospital in the low-end market Strengthen the Group‘s coverage and realizing the With undergoing post- pipeline layout and market potential of launch re-evaluation for advantages in the fields of Multi-dimensional international undeveloped market key products CCV, oncology and diabetes business collaboration platform

M a r k e t i n g Strengthen the supply of API, Experienced and international a n d S a l e s reduce costs and strengthen professional management the competitive advantage team of generic drugs C l i n i c a l High-efficiency, low-cost, r e s e a r c h modern facilities covering multiple therapeutic areas

Grasp policies Abundant cash and strong financial position and market Investment t r e n d s h i g h l i g h t s

43 Thank you

44